Court Discusses Pour-Over Wills

On 24 January 2006, a resident of Nassau County died. Prior to his death, on 24 October 2003, he had created a Revocable Trust. At that time, he also executed his will, the instrument that is offered for probate. Both instruments were drafted by the decedent’s long-time attorney who also supervised the execution of both documents. As is customary with estate plans of this sort, the bulk of the decedent’s assets were transferred to the trust while he was alive. As a result, the will was designed to be a “catch all” so that any stray assets left in the decedent’s estate would be captured and distributed in accord with the terms of the trust. The probate petition reflects a probate estate of less than $10,000.00 while the trust holds assets close to $1,000,000.00.

Thereafter, the guardian ad litem, who was appointed to represent the interests of the decedent’s daughter, examined the circumstances surrounding the execution of both the trust and the will. A New York Probate Lawyer said in her affidavit of services the guardian ad litem stated that she spent 7.2 hours on the matter, representing a charge of $2,828.00 for services rendered.

A probate proceeding followed and also submitted for decision is the issue of the source of payment for fees awarded to a guardian ad litem.

It must be noted that this is a probate proceeding involving a will that “pours over” into an inter vivos trust. Westchester County Probate Lawyers said the court must decide whether trust assets can be used to pay all or part of the fee.

The Ruling:

The rules provide that the fee of the guardian ad litem may be payable from any or all of the following, in such proportion as directed by the court: the estate; the interest of the person under disability, or for good cause shown, any other party.

While the law generally contemplates that the fee of the guardian ad litem in a probate proceeding will be paid out of estate assets or the ward’s share of the probate estate, the circumstances before the court justify a different result.

In a probate proceeding which involves a will that “pours over” into a pre-existing inter vivos trust, such trust is a party to the probate proceeding either via its trustees or its beneficiaries and either as a cited or noticed party. Clearly, the responsibilities of the guardian ad litem included a review and investigation of both the will and the trust.

A somewhat analogous situation was addressed by the court in another case: While the following is extremely unlikely to ever occur, it does present a scenario where a legal fee adjustment would be mandated. If A died leaving a testamentary estate of $100,000 and bequeathed $75,000 to B but also exercised a power of appointment over the remainder of a trust of over $100 million in favor of C where the default beneficiary was D, one can imagine a very costly probate contest brought by D and defended by C, the nominated executor. It is also not hard to imagine legal expenses far exceeding $100,000. Were the will contest to be settled between C and D, would it be appropriate to wipe out the estate in legal fees and thus extinguish B’s bequest of $75,000? The answer would clearly be that it would be inappropriate.

Based on the foregoing, the court holds that the assets of the decedent’s Revocable Trust may be used as a source of funds to pay the fee of the guardian ad litem.

The court bears the ultimate responsibility for approving legal fees that are charged to an estate and has the discretion to determine what constitutes reasonable compensation for legal services rendered in the course of an estate administration; estate litigation. This remains true even in the event that the parties have consented to the requested fee.

While there is no hard and fast rule to calculate reasonable compensation to an attorney in every case, the Surrogate is required to exercise his or her authority with reason, proper discretion and not arbitrarily.

In evaluating the cost of legal services, the court may consider a number of factors, viz: the time spent; the complexity of the questions involved; the nature of the services provided; the amount and complexity of litigation required; the amounts involved and the benefit resulting from the execution of such services; the lawyer’s experience and reputation; and the customary fee charged by the Bar for similar services.

The court, in discharging its duty to review fees, cannot apply a selected few factors which might be more favorable to one position or another but must strike a balance by considering all of the elements. Also, the legal fee must bear a reasonable relationship to the size of the estate and to the interest of the ward of the guardian ad litem. Moreover, Suffolk County Probate Lawyers said it is well-settled that time spent is, in fact, the least important factor considered by a court in fixing reasonable compensation.

The guardian ad litem is entitled to a fee for his or her services rendered. These factors apply equally to an attorney retained by a fiduciary or to the court-appointed guardian ad litem. Moreover, the nature of the role played by the guardian ad litem is an additional consideration in determining his or her fee. Normally, the fee of a guardian ad litem is an administration expense of an estate and is paid from estate assets. However, a party may be charged with payment of the compensation of a guardian ad litem where the actions of such party generated unnecessary, unfounded, or purely self-serving litigation that resulted in the appointment of a guardian.

The burden with respect to establishing the reasonable value of legal services performed rests on the attorney performing those services. Contemporaneous records of legal time spent on estate matters are important to the court in the determining whether the amount of time spent was reasonable for the various tasks performed. In the absence of contemporaneous time records, little weight is given to estimates of time after the services have been performed. This applies to the fee of a guardian ad litem.

Henceforth, the court approves the fee of the guardian ad litem in the amount requested and may be paid from trust assets.

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